Nike has been able to become a global player in the industry of sports apparel and athlete endorsements because of many different factors that are outlined in the way they manage their company. By analyzing the business plan of Nike we can see how their supply chain is set up as is illustrated above. The supply chain is very important for the transfer of their goods from the supplier of raw materials to a manufacturer, then to a distributer, then to a retailer, to then be available for the customer. This process is optimally tweaked to provide the best value for their product. One factor that Nike has strived to make as a standard for their company is the idea of reverse logistics. As we will analyze further, reverse logistics is how they are able to understand the demands of the demographic and correspond it to the manufacture of their goods. This is seen as a vital tool for product research and development at Nike. As we explore the different parts of the chain, it is important to keep your mind on the big picture and how this process comes together. 1. Contract Suppliers
What Nike has implemented into their system with outsourcing the production of raw materials, has been done by many large apparel companies and is seen as something that can be highly profitable rather than producing the materials within the company. So what Nike has done, is brought in contract suppliers from all over the world like Vietnam for instance. To help visualize this part of the process, we must understand that the supplier has its own supply chain and it ends with exporting the products to Nike, which is where Nike’s supply chain begins.
In the 90’s there were serious allegations of unethical practices carried out by Nike in terms of their Asian suppliers and how services were being carried out. In an effort to get away from this image that was painted of them, Nike has taken strides to implement disclosure to how the supply chain is run. Over the years, they had been using a “push” system to measure sustainability based on compliance from overseas suppliers. As of recently however, Nike has turned to a “pull system” which is focused around incentives for a well carried out process from their contract suppliers. With this system in place, Nike is closely watching the performance of their suppliers and rating them in colors with the best being gold and descending from silver, bronze, yellow and red. Colors from bronze to gold are seen as successful and are given benefits and opportunities that would not be accessible to suppliers given a rating of yellow or red. These benefits and opportunities are seen as incentives for these suppliers and form the system they have created for managing sustainability. 2. Logistics
This part describes the movement of the raw materials from the contract supplier to the manufacturer. This is usually done by either boat or plane and this step varies due to the fact that Nike’s manufacturing plants are located all over the world along with the suppliers. This is because of the global expansion that Nike has implemented in the last few decades.
The parties responsible for this transportation are also measured on this new system of incentives. Nike closely records each transaction and is in touch with the supplier and manufacturer to get the best idea of how the transportation was carried out. These third party transporters are rated in the same way as the suppliers and are given rewards for timely deliveries of material. 3. Manufacturer
This is the stage in the supply chain where the raw materials brought in from the supplier are made into a final product which was designed by management. This is an important step in the cycle because this is where the ideas set by the research and development team, which are influenced by the target demographic, are made into reality and are kept until further movement of the product. Most Nike manufacturing plants aren’t designed to hold a large amount of...
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